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TDQ: Test Your Knowledge – Questions

28 March 2019

For Professional Paraplanner’s TDQ (Training, Development and Qualifications) series, we have teamed up with key support providers, such as Brand Financial Training, to provide our readers with the very best in training, development and exam support.

This series aims to provide you with valuable advice and guidance materials to help you achieve your training goals, perfect your exam techniques and test your knowledge of the financial services market.

The following 10 questions, which can also be found in our September 2018 issue, relate to examinable Tax year 18/19, examinable by the CII until 31 August 2019.

These questions relate to examinable Tax year 18/19, examinable by the CII until 31 August 2019.

1. What are the three formalities required in making a will?
A. Printed writing, typed writing and hand writing
B. Writing, signature and attestation
C. Executors, trustees and beneficiaries
D. Testator’s signature and two witness signatures

2. Exon PLC has a beta of 1.2, the expected return of the market portfolio is 6% and the expected return on a Treasury bill is 3.3%. Using the CAPM formula, what is Exon’s expected return?
A. 9.06%
B. 8.52%
C. 6.54%
D. 9.24%

3. Samantha has an offshore bond and her friend Julia has an onshore bond. They have asked you to explain some of the features of both products. You can tell them that: Tick all that apply.
A. only onshore bonds benefit from ‘time apportionment relief’
B. only offshore bonds benefit from gross roll up
C. both products benefit from top slicing relief
D. offshore bonds are better protected in the event of the company failing

4. State Pensions are funded on a ‘pay as you go’ basis. What does this mean?
A. Revenue from income tax is used to pay for the State pensions of today.
B. The current working population pay into their future NEST benefits.
C. NICs of the current working population pay for State pensions of today.
D. Revenue from all the direct taxes is used to pay for current State pensions.

5. How is the cover provided under a whole of life policy affected if premiums cease at a stated age?
A. It remains in force for a maximum period of 10 years
B. It reduces to 50% when premiums cease
C. It reduces by a stated percentage in each future year
D. It is not affected – the cover continues until death

6. Your client Marie wants to know a little more about the risk assessment process you are currently undertaking with her. You explain to her that her risk profile will be based on her:
A. age, health and risk perception
B. risk tolerance, age, income and tax status
C. risk perception, tolerance and time horizon
D. risk tolerance, perception and capacity

7. An order has been placed to sell an existing shareholder once the price reaches a specified price – this is known as what type of order?
A. a stop loss
B. a fill or kill
C. an icerberg
D. at best

8. Which of the following statements regarding the requirements for a deed of variation to be effective for IHT planning is false?
A. It must refer to a will, intestacy or trust
B. It must be executed within two years of death
C. There must be no consideration for money or money’s worth
D. It must be signed by all the beneficiaries of the will

9. Pauline is in poor health and has been told that she has a relatively short life expectancy. She would like to release some equity from her house to pay for an expensive holiday with her family whilst her health permits it, what type of plan is likely to be unsuitable for her?
A. Lifetime mortgage with interest paid
B. Home Reversion Plan with minimum inheritance guarantee
C. Home Reversion Plan without minimum inheritance guarantee
D. Drawdown Mortgage

10. Fiona has sold her buy-to-let property making a gain of £85,000. Fiona has taxable earnings of £67,000 in this tax year. What rate of tax will Fiona pay on this gain?
A. 10%
B. 18%
C. 20%
D. 28%


Professional Paraplanner